The substantial premises containing one of New Zealand’s largest pie manufacturers is the latest real estate asset to be added to a fast-growing property fund specifically set up to purchase low-risk commercial real estate assets.
The significant 5,439sq m industrial bakery premises in Silverdale on Auckland’s northern boundary is home to the well-known pie-maker Dad’s Pies, which was acquired by Australian-owned Allied Foods at the end of last year.
The property at 57 Forge Road has been purchased by First Light Capital Limited to add to its First Light Property Fund Limited investment vehicle, which has a projected pre-tax cash return of six percent for FY23 and a weighted average lease term of 5.7 years.
The plant consists of some 2,500sq m of warehouse and manufacturing facilities, a 157sq m cafe and retail outlet, and 157sq m of offices. The Silverdale premises was purpose-built for Dad’s Pies in 2002 and expanded in 2006 as consumer demand for the brand’s tasty treats continued to grow.
Dad’s Pies is on a lease running through to 2030 with three further five-year rights of renewal – generating a current annual net rental of $631,770.
Plans are in place for potential expansion at the Forge Road/Peters Way site – with Dad’s Pies holding the lease to a neighbouring 3,000sq m warehouse. A consented connection already exists between the two separately owned facilities.
The Silverdale pie-making premises at 57 Forge Road complements the fund’s other commercial property assets:
• 233 Collingwood Street in Hamilton – comprising 2,152sq m of freehold land, and a 1,720sq m building.
• 2 Harris Road in East Tāmaki, Auckland – comprising a 1,515sq m two-storey office complex sitting on 2,819sq m of freehold land.
Within the established tenancy schedule of the two cornerstone fund properties are insurance companies NZI and Aon, Bayleys Real Estate, and WorkSafe New Zealand.
First Light Capital Director Toby Hunn says the acquisition of the Silverdale property diversifies the fund’s investment by both asset class and geographic location and reflects the company’s intention to operate an ‘open-ended’ fund continuously raising capital as its asset base increases.
“The Silverdale industrial premises contains some iconic brand names in the New Zealand pie market and replicates the quality of tenants in the fund’s other existing portfolio assets,” Hunn says.
“With a long-term vision and model, the fund is designed to provide investors with access to a diversified portfolio of what will be made up of New Zealand industrial and commercial properties.”
First Light Capital Chief Executive Officer Shane Scott says: “The principal objective of the fund is to allow shareholders of the fund to collectively invest in New Zealand industrial and commercial properties located in growth sectors of New Zealand in order to derive investment returns which are closely correlated to returns those investors would have derived had they invested themselves … but with the benefits of scale and portfolio diversification.”
Hunn says the 57 Forge Road property acquisition will allow the fund to maintain its annual net pre-tax cash dividend of 6 per cent per annum, with dividends paid monthly.
First Light Property Fund Limited is a portfolio investment entity (PIE) for tax purposes – meaning that investors benefit directly from the fund’s tax deductions and are taxed at their applicable tax rate capped at 28 per cent.
Charlie Oscroft, Director of Syndications at Colliers, says First Light Capital’s acquisition of the Forge Road property was a direct reflection of the strength of New Zealand’s industrial property sector over recent years.
“And having a tenant which manufactures the classic Kiwi cuisine of pies is an additional benefit,” Oscroft says.
The First Light Property Fund Limited is one of a number of funds that are managed by First Light Capital Limited. First Light Capital’s portfolio of Auckland real estate assets encompass a mix of industrial and commercial premises tenanted by high-profile corporates and government entities.
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